Inflation to Impact Consumer Spending Ahead of Holidays
As the holiday season approaches, gift spending is expected to drop $30 billion—with a 58% consumer cut back, according to Forbes. This is largely due to the fact that inflation is taking a large bite out of consumer wallets—steering spending away from non-essential holiday purchases toward household goods.
"40% of holiday shoppers say that inflation will change the way they shop—that includes seeking out discounts more aggressively, buying fewer items and starting shopping earlier," Ted Rossman, senior analyst with Bankrate.com, a site that conducts consumer surveys, told Marketplace.
Sales in November and December average 20% of annual retail sales, which make the holiday season critical. And in preparation, retailers plan to order inventory ahead of time to avoid supply chain delays seen in the previous two years, per AP News. "This year, small businesses are bracing for a more muted season, as some Americans spend more cautiously," the article reads. "AlixPartners, the global consulting firm, forecasts that holiday sales will rise between 4% to 7%, far below last year's growth of 16%. With inflation running above 8%, retailers would see a decrease in real sales."
Customer demand trends constantly change, and it is essential for brands to stay ahead of the curb. Nearly six in 10 shoppers said, "sales and promotions are more important to them now than they were a year ago," according to Marketwatch.